'The Greeks Can't Have Their Cake and Eat It Too'

Spiegel
May 25, 2012

Anxieties have reached a new high in Europe as uncertainty reigns over a potential Greek exit from the euro zone and new figures raise fears that the crisis may be affecting the German economy. German commentators on Friday review the currency union's options.

Time appears to be running out as fears of a Greek financial collapse continue to mount in Europe. Without a stable government capable of implementing promised reforms, the likelihood that Greece will be forced to leave the euro zone seems ever greater.

Greece's caretaker government is not in a position to implement critical reforms due to the upcoming new parliamentary election on June 17, German daily Süddeutsche Zeitung reported on Friday. The paper wrote that, according to information it had obtained, the "already lagging reform efforts by the government in Athens have practically ground to a halt recently." It cited the failure to privatize state assets as one example.

Additionally, many Greeks have apparently quit paying their taxes in fear of a possible Greek exit from the euro zone, the paper reported. The Greek Finance Ministry expects to collect 10 percent less tax revenue in the month of May due to the ongoing recession, which is now in its fifth year, according to the news agency Reuters.

Because of fears that the left-wing Syriza party, which has demanded that the EU lift austerity demands on Greece, may come to power after the election next month, euro zone member states are reportedly already developing contingency plans for the event that the country leaves the currency union soon after the vote. Still, the official line is that the euro zone wants to keep Greece in the fold.

Meanwhile Germany, up until now the most solid country in the euro zone and the currency union's biggest economy, appears to be running into trouble itself on fears of a Grexit, as the media has dubbed a possible Greek departure from the euro area. On Thursday, new figures revealed that the German manufacturing sector has been shrinking at the fastest rate in three years in May, and the service sector saw little growth in May. Also on Thursday, the leading Ifo Institute for Economic Research reported that German business sentiment had gone down in May for the first time in seven months.

To make matters worse, French President François Hollande challenged German Chancellor Angela Merkel's policies on Wednesday by proposing the implementation of controversial euro bonds, or jointly issued bonds, as the center of his growth agenda.

As the clouds darken on the euro-zone horizon, German editorialists examine the increasingly precarious efforts to keep financial disaster at bay.

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